Will Pricing Algorithms Spell the End of the Fair Market Price?

"This type of pricing algorithm uses data collected about a consumer (such as their location, browsing history, or purchasing behavior) to estimate how much that individual is likely to pay for a product or service, and then it adjusts the price presented to that person accordingly, to extract the highest value from the transaction."

"Yes, companies have long been in the business of segmenting and researching audiences to understand price thresholds and to optimize prices in response to the market-I worked in advertising for fifteen years and have done this work myself-but these new, highly sophisticated pricing algorithms represent a fundamental [shift]."

Personalized pricing algorithms represent a significant evolution in commercial pricing practices. These algorithms collect consumer data including location, browsing history, and purchasing behavior to estimate how much each individual is willing to pay for products or services. The algorithms then adjust prices dynamically to extract maximum value from each transaction. While traditional market segmentation and price optimization have existed for decades, personalized pricing algorithms operate at a fundamentally different scale and sophistication level. Organizations like the OECD have flagged these algorithms as concerning dark commercial patterns and anti-competitive practices worthy of monitoring. The technology raises important questions about fairness, transparency, and whether consumers are being charged different prices based on algorithmic predictions of their willingness to pay.

Read at Apaonline